Foster acts on independent review recommendations

Jan 25, 2010

Enterprise Minister Arlene Foster delivered her action plan in response to the recommendations from the Independent Review of Economic Policy, (IREP) report, today.

The IREP panel, headed up by Professor Richard Barnett, was commissioned, by the Minister, to assess whether the Department of Enterprise Trade and Investment (DETI) and Invest Northern Ireland policies and programmes were sufficient to help deliver the productivity goal contained in the Programme for Government.

Speaking in the Assembly, Arlene Foster said: “The report represents a significant piece of work which will help shape economic development policy in Northern Ireland.

“Many of the recommendations will be implemented by my Department and Invest NI as soon as practicable. Other recommendations, by their very nature, will require further analysis.

“The Review has clearly stated that efforts to raise living standards and productivity in Northern Ireland cannot lie solely at the door of DETI or Invest NI. It is ultimately the responsibility of companies in the private sector to invest in areas such as skills, exports, research and development, (R&D), and innovation, to boost competitiveness,” she added.

The Minister summarised the areas of work to be undertaken and said: "There are four key areas under which the plans will be implemented: the co-ordination of economic policy in Northern Ireland; DETI and Invest NI assistance to industry; autonomy, flexibility and decision-making and policy development and monitoring.”

· The co-ordination of economic policy in Northern Ireland

The Minister said she 'strongly supported' the establishment of a new Department of the Economy by merging DETI with the Department of Employment and Learning (DEL).

She added: “It is imperative that we work to reduce the number of government departments in Northern Ireland and the Report makes a strong case for bringing together the responsibilities of DETI and DEL.

“I have asked Executive colleagues to consider the creation of a new Department of the Economy, as part of the planned review of strand one institutions.

“I recognise, as did the Review Panel, that getting agreement and implementing new structures will take some time, which is why I am advocating the interim steps suggested by the Panel to improve the structures that are currently in place.

“Central to this is the establishment of an Executive sub-committee to prioritise cross-departmental action on the economy."

The Minister said the sub-committee should comprise Ministers currently responsible for delivering the Programme for Government goal of improving private sector productivity, namely DETI, DEL and the Department of Regional Development (DRD) as well as the Office of the First Minister and Deputy First Minister (OFMDFM) and the Department of Finance and Personnel (DFP). Other Departments would be involved as specific issues arose.

Arlene Foster told her Assembly colleagues she agreed with the IREP Panel that the sub committee should drive the development of an economic strategy for Northern Ireland.

“This new economic strategy should be at the heart of the next Programme for Government,” she added.

· DETI and Invest NI assistance to industry

Turning to recommendations concerning Invest NI, the Enterprise Minister agreed with the recommendation that Invest NI should seek to offer support, in its broadest sense, to a much wider business base.

She said: “I have asked the Chief Executive of Invest NI to review how the organisation could develop a tiered portfolio of support across the wider business base to accelerate innovation, R&D and export growth.

“Within a tighter public expenditure environment, we must prioritise support and also recognise the importance of advisory and other forms of assistance.

“I have also asked Invest NI to consider how the development of a Small Business Unit could fit within this model to provide a more dedicated resource for small businesses throughout Northern Ireland.”

A fundamental issue at the heart of the IREP report is the view that there needs to be more support for Innovation and Research & Development (R&D) from employment-based schemes, such as Selective Financial Assistance (SFA).

The Minister said: “It must be recognised that Invest NI has already taken action to skew more funds towards Innovation and Research & Development. In the current financial year Invest NI increased its budget allocation for these areas by a further 30%, which means they now account for 38% of programme spend.

“I have asked my officials to continue to look for ways to maintain this trend.”

She added: “Regional aid limits for the support we offer to projects through SFA are to be significantly reduced and we will see major changes from the end of 2010.

“The critical issue then is how we should be deploying SFA, both now and in the run up to 2013 when we face the potential loss of it as a policy instrument? My view is that we should continue to use SFA for as long as we can, particularly as we seek to rebuild the economy throughout 2010.

“However, going forward in non-recessionary years, we also need to consider how we best deploy SFA effectively to improve productivity. This was a key point in the report. My view is that SFA should be used in the future to support investment in indigenous companies and help attract new and potential follow-on investments to Northern Ireland. That must be the key to improving relative living standards here.”

The Minister said: “There is no evidence in the report that resources have been wasted. The Review Panel recognised that Invest NI has made a significant contribution to economic and employment growth in Northern Ireland.

“Further consideration will be given to when and where we should use SFA. This could potentially involve setting higher job quality thresholds than those currently in place. It may also involve supporting certain strategically important projects and those in areas of particular economic need.

“However, it should be recognised that there will be limited scope to make changes to Invest NI spending in 2010/11. It is therefore about preparing for change for the new Programme for Government period starting in 2011/12.”

· Autonomy, flexibility and decision making

The Panel’s review of global best practice has suggested that successful development agencies benefit from having freedom to operate in a way that allows them to be entrepreneurial and responsive to business needs.

Arlene Foster said: “A criticism often levelled at DETI and Invest NI is that the governance system remains too complex and time consuming, and that this is impeding Invest NI’s responsiveness.

“My officials have already held discussions with DFP to explore how the current delegated limits might be extended. Where major projects require DETI and DFP approval, I accept the Panel’s recommendation that these cases should be considered in parallel by a Central Project Review Group.”

· Policy development and monitoring

The Independent Panel made recommendations regarding DETI and Invest NI’s role in policy development. Restructuring in DETI is already being addressed in light of the IREP recommendations to ensure they are fit for purpose.

Reference was also made to performance monitoring, including that the department should assume responsibility for reporting on Invest NI performance. This will now be undertaken.The Minister said: “Invest NI’s Operating Plan for 2010/11 will include targets specifically for investments new to Northern Ireland as per the Panel’s recommendation.”

Turning to the future of the Economic Development Forum, (EDF) Arlene Foster said she took on board the Panel’s recommendation that it should be replaced with a new, smaller advisory unit made up of representatives from business and economics.

She said: “I have written to EDF members advising them that the Forum has been stood down and will be replaced with a new advisory unit, to be established by April 2010. This unit will include representatives from Invest NI, business, skills and an independent economist. This unit will also address a further recommendation made by the Panel, namely the creation of an independent economic advisor.”

The Minister announced the establishment of a steering group to implement the recommendations she wants to take forward. The group will include representatives from Invest NI and, where appropriate, officials from other Executive Departments; as well as independent DETI board member, Dr Ian McMorris and Northern Ireland Skills Advisor, Dr Bill McGinnis.

In conclusion the Minister said: “I am determined to drive forward this action plan with a view to promoting economic development for Northern Ireland.

“I believe the actions I have outlined today, in response to this root-and-branch review, will set us on the course for economic growth and ultimately, deliver higher living standards for everyone in Northern Ireland.”